STAFF NEWS & ANALYSIS
Latest EU Bailout Deal Not Meant to Work?
By Staff News & Analysis - October 31, 2011

Will Europe Rescue China? … All eyes will be on China at this week's G-20 meeting in Cannes. The expectation—or at least the hope—is that Beijing will contribute to Europe's bailout fund, the European Financial Stability Facility. The Greece-rescue plan announced on Thursday in Brussels calls for an increase in the size of the EFSF from 440 billion to a trillion euros. At the press conference announcing the deal, French President Nicolas Sarkozy said that the EU would like support from Beijing, and he called his Chinese counterpart, Hu Jintao, to ask for help. – Forbes

Dominant Social Theme: We've been trying hard and look at all we've done. Don't blame us when it all goes to hell and we have to create a global currency.

Free-Market Analysis: The latest Eurocrat deal to salvage the euro (and perhaps the Union itself) is already falling apart and, as a result, the entire process is ever more publicly suspect. Is the idea to make the West so desperate that global governance becomes an attractive solution?

The dominant social theme is, of course, one of hope. The EU's wise leaders have once again Saved the World. But we have expressed the idea previously that the disaster is being stage-managed to ensure that when Europe does fall apart, no one shall be to blame. The Eurocrats will be able to spread their hands, palms up, and say in unison, "Don't blame us."

Then, you see, the conversation shall turn to the IMF's SDR currency-in-waiting and how the IMF should serve as global central bank, dishing out its incomprehensible basket-fiat currency to all and sundry. This is perhaps the REAL plan – or one of several plans, as it looks more and more as if the euro is going the way of the Dodo.

It is nonetheless an emphatic defeat for the Anglosphere elites who are determined to create a one-world currency as part of a new world order. Regional agglomerations of nation-states are supposed to be stepping stones to this structure and they are in place around the world – from South America to Asia to Africa. But the main ones that count the most are (1) the European Union that is falling apart before our eyes and (2) the North American Union, which is in such bad odor that even Bilderberg Boy Rick Perry has to deny its evident and obvious reality.

Blame it on the Internet Reformation that has informed residents of both Europe and America of the elite's deeply laid plans and their determination to have their global government no matter the cost. As predicted, the tribes of Europe are fighting back. And for all the false-flag protests now taking place in the US, there is a growing, stubborn antipathy to what the powers-that-be are trying so hard to accomplish.

Eurocrats in aggregate do not even have the strength of their own convictions. They voted for a trillion-dollar bailout package but then refused to fully fund it. Instead, they have declared that the G20 and China should think about coming to Europe's assistance.

Once the money has poured in, the fund is reportedly to be leveraged up to US$5 trillion, as if borrowing more money ever helped anyone get out of debt. The only salvation to be had is to allow the European Central Bank to print euros at will, as the US Federal Reserve prints dollars endlessly.

Of course, the US, having the world's reserve currency, can print dollars fearlessly because it has forced the Middle East at the point of a gun to exchange oil only for dollars. This is laughingly called the "dollar reserve system." Europe doesn't have an army (yet) and even if it did, the US has gotten there first. The petro-dollar is a US invention and has allowed US leaders to be even more profligate than European ones.

And thus the Eurocrats go begging. China is already making noises of resistance, however, and the G20 is a rather unwieldy collection of countries to count on when it comes to a half-trillion dollar bailout. It may come down to the US printing money, or Eurocrats reaching down further into the pockets of their constituents, but we'd be somewhat surprised if either of these options are actually viable.

Here's the official word from the Xinhua News Agency: "Amid such an unprecedented crisis in Europe, China can neither take up the role as a savior to the Europeans, nor provide a 'cure' for the European malaise." Doesn't sound very promising, though perhaps the ChiComs are merely playing coy to sweeten the pot.

Forbes, in one of several articles on the deal, is even more dubious than Xinhua. Like the Telegraph, in an article over the weekend that claimed the deal with fall apart in weeks, Forbes' commentators seem increasingly skeptical that this bailout will provide a lasting solution. Here's some more from the article excerpted above:

There are many reasons for Beijing not to support Europe. First, Thursday's plan is obviously just another temporary fix. There were "comprehensive" and "final" plans announced this March and July, and it may be only months before European leaders will need to come up with still another one.

Second, the Europeans are not pledging their own resources. After all, they merely said that the EFSF would be "leveraged," in other words, eurozone leaders will be looking for others to chip in 560 billion euros. They refused to commit their own cash or even issue sovereign guarantees.

Third, Europe does not need China's money. The continent is capital-rich and a net exporter of capital. "The reason peripheral European governments cannot get financing is not because there is a lack of capital or liquidity," explains Peking University's Michael Pettis. "They don't need Chinese capital. They need someone foolish enough to lend money to countries that probably won't repay."

The Forbes article concludes that Chinese leaders are looking for a way out but probably will eventually end up "buying rubbish bonds" because China simply can't afford to let the EU unwind. And why is that? Because the ChiComs "diversified" China's holdings over the past few years and now hold nearly US$1 trillion in euros!

China holds $3.2 trillion in foreign exchange reserves – mostly in euros and dollars and is therefore as much a party to the world's failing fiat currencies as the West. Good job, China. We've written in the past that China is the third leg of the stool. America is struggling with its Greater Recession, Europe seems on the way to shattering and thus only China is now propping up the world's economy.

We'll see how long that lasts. China's problems are manifold and deep. They're just not being properly reported by an Anglosphere mainstream media that has its marching orders: Pretend all is well with the world until the entire system simply collapses.

After Thoughts

It is perhaps a kind of "shock and awe" strategy. The idea is that everything goes to hell at once and as people panic the great central banking families step in with a new currency and a new system waiting in the wings. So here is our question: Who is to be the next John Maynard Keynes?

Posted in STAFF NEWS & ANALYSIS
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